The Foreign Service Journal, December 2008

D E C E M B E R 2 0 0 8 / F O R E I G N S E R V I C E J O U R N A L 47 he election campaign of 2008 marked a sharp reversal of the bipartisan consensus favoring the free flow of goods, services, capital and ideas that has guided our nation since World War II. During the primaries, the leading Democratic contenders for president attacked free trade and pledged to vote against the bilateral trade agreements with Korea and Colombia that the current administration has negotiated, on the ground that open trade hurts American workers. It is hard to believe that just 15 years ago, a Demo- cratic administration was celebrating the passage of the North American Free Trade Agreement, pledging with the 33 other democratically elected leaders of the Western Hemisphere to negotiate a Free Trade Area of the Americas and endorsing an agreement reached among the 21 economies of the Asia Pacific region to lib- eralize trade throughout that region. In contrast, today an increasing number of our elect- ed representatives are embracing what economist Robert Samuelson calls “new mercantilism,” which he defines as “policies intended to advance [one country’s] own economic and political interests at other countries’ expense.” Mercantilism stands in stark contrast to the theory of comparative advantage advocated by David Ricardo, who contended that all countries benefit if global mar- kets are kept open and each country sells what it best produces. His theory has guided our bipartisan trade policy for more than six decades, but now is under fierce assault. The U.S. Role in Opening Markets For 60 years the United States has taken leadership positions in opening global markets, starting with the first round of trade talks among 23 nations in 1947 and the creation of the General Agreement on Tariffs and Trade, through the 1995 creation of the World Trade Organization and the 2001 launch in Doha of the ninth and current round of trade talks among 153 nations. As global markets opened, trade exploded and standards of living soared. Economist Gary Hufbauer, in a comprehensive study published in 2005 by the Peterson Institute for International Economics, calculates that the opening of global markets since the end of World War II has made F O C U S O N I D E A S F O R T H E N E W A DM I N I S T R AT I O N T RADE AND A MERICA ’ S F UTURE L OWERING GLOBAL TRADE BARRIERS WILL CREATE NEW ECONOMIC OPPORTUNITY FOR ALL NATIONS — INCLUDING OUR OWN . B Y C ARLA A. H ILLS T Carla Hills is chairman and chief executive officer of Hills & Company, an international consulting firm pro- viding advice to U.S. businesses on investment, trade and risk assessment issues abroad, particularly in emerging market economies. She was U.S. trade representative from 1989 to 1993.